Guitar Center upsizes to $350 million, talks secured notes at 8¾%-9%; pricing Tuesday

By Paul A. Harris

Portland, Ore., Dec. 8 – Guitar Center, Inc. upsized its offering of five-year senior secured notes (B3/B-) to $350 million from $335 million and talked the notes to yield 8¾% to 9%, according to market sources.

The deal is a blowout, according to a bond trader, who added that order books were heard to be at least four-times the size of the offering early Tuesday.

Dealers accelerated the timing. Books close a 2:30 p.m. ET on Tuesday, whereas the Rule 144A and Regulation S for life offering had been expected to remain in the market into the later part of the Dec. 7 week.

UBS Securities LLC is the left lead bookrunner.

The notes become callable after two years at par plus 50% of the coupon.

The issuing entity will by Guitar Center Escrow Issuer II, Inc., which will be merged with and into Guitar Center, Inc.

The Westlake Village, Calif.-based musical instrument retailer plans to use the proceeds, along with proceeds from the other restructuring transactions, to pay off its ABL DIP facility, term DIP facility and $42 million outstanding under its superpriority notes, as well as to pay the cash portion of the consideration to holders of the existing secured notes in settlement of their claims, to pay fees, interest and expenses in connection with restructuring transactions and bankruptcy cases, and for general corporate purposes.

Guitar Center filed for Chapter 11 bankruptcy protection in late November.

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